The chancellor is unlikely to impose the levy on energy firms - and might propose energy vouchers to help out low-income families instead.
The possibility of a windfall tax being imposed on Britain's energy companies appears to be becoming less likely, the Guardian reports.
Ministers have been put under pressure from consumer groups and MPs to impose the levies, following big recent price hikes from energy providers. Market leader British Gas, which retains over 15 million customers in the UK, even put up its gas tariffs by 35 percent earlier this month.
Under the terms of the policy proposal, money derived from the tax would be ploughed back in to helping low-income households pay their energy bills.
However, despite the fact that a petition recommending that the windfall taxes be introduced has attracted the signatures of over 70 Labour MPs, government insiders told the newspaper that the policy change would not be enforced. Instead, chancellor of the exchequer Alistair Darling is thought to be looking into alternative ways of helping less well-off energy customers, such as redeemable vouchers.
John McFall, chairman of the Treasury select committee, commented: "The government has got to be seen to be helping ordinary people in these difficult economic times. The price of oil is going up, and therefore fuel prices are going up. My own view on the prospect of a windfall tax on energy companies is that the government will be cautious about introducing something which has an implicit retrospective element to it."
The proposed tax has met with strong resistance from the energy industry. Speaking to the newspaper David Porter, chief executive of the Association of Electricity Producers, said: "A legalised raid on the company's bank accounts...would be very unhelpful because it would scare off investors and also could make the cost of investment much higher and, in the end, that would end up on the customers' bills.
"Every £1 million you take out of each company through this legalised raid is £1 million they have to raise elsewhere."
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